PNB Analysis 2012

8/13/2019 PNB Analysis 2012

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B SIC FIN NCI L CCOUNTING FOR

M N GERS

PROJECT REPORT

PNB BANK

(Ratio Analysis of Financial Statement)

Assignment - 1

Mentor: Submitted By:

Preeti Bakshi Divya Singh Rathore

Himanshu Kushwaha

Koushik Dutta

Md. Janisar Najish

Namrata GwalNeeraj Sharma

Pranati Jaiswal

Tapesh Singh


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ACKNOWLEDGEMENTThis is a matter of pride for us to express our gratitude and

thankfulness towards our faculty Prof. Preeti Bakshi who gave us the

opportunity to undertake this project which helped us in understanding

the practical and theoretical aspect related to various tools for analysis

ratio analysis) which helped us in the working process of our Finance

Project and thereby enhancing the knowledge of the same.

We sincerely thank our Librarian Mr.

Vipul for his valuable guidance and help which led us to complete our

project work.

DATE: - 24/09/2012 Group 5

Section


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T BLE OF CONTENT

1) Introduction

2) Ratio Analysis as a tool of study

3) Executive Summary

4) Ratios & Interpretation

5) Annual Report of the PNB Bank

6) Conclusion

7) Bibliography


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INTRODUCTION

PNB remained frontrunner in the Indian Banking with its TotalBusiness, Total Deposits and Total Advances growing over 21% on

YoY basis. This is higher than the growth achieved by the Banking

System in India. This performance is combined with the consistently

higher Book Value per Share and Earnings per Share. This impressive

performance was largely due to the Bank's focus on 'Building a

Customer Experience' with thrust on Retail, SMEs, Agriculture,Students, Inclusive approach to Banking, Cost effective

Organizational Structure, Better Asset Liability Management,

Prudent Risk Management, strengthening Recovery Mechanisms

and various Cost Control Measures.

PNB is amongst India's most trusted brands and features at the25th place

amongst the Top 50 most valuable corporate brands by Brand Finance-ET and195th amongst top 500 global banks as per Brand Finance Global Banking 500

for 2011. More importantly ,during 2011-12, PNB has been recognized as the

'Best in Corporate Social Responsibility (CSR) Overall' by World HRD

Congress and been recognized as the 'Best Socially Responsive Bank' by

Business World & PwC. Besides, Golden Peacock National Training Award has

also been conferred upon the Bank by the Institute of Directors.

Above all, the Bank was recognized as the 'Best Bank' by Business

India.


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R TIO N LYSIS S a TOOL OF

STUDY

Ratio Analysis presents the relationship between the items in the

financial statement. The analysis of financial statement aims to

study the relationship between various business factors in a

business as disclosed in the financial statement for a particular

period. This helps in studying the position of the company from

various angles as expressed in the form of Percentages,

Proportion, Rates etc this helps the end users to understand and

interpret these results in a simple and understandable form.

The end users are interested in the companys

financial information due to various objectives. Shareholders are

interested in the yield and safety of their capital invested.

Creditors view the companys financial data from the angle of

judging companys debts. Short term creditors are interested in

the companys liquid position which is estimated by calculating

companys currents asset and current liabilities.


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EXECUTIVE SUMM RY

The financial year gone by proved to be a challenging year for theeconomy. GDP growth rate came down from 8.4% in previoustwo consecutive financial years to below 7% this year with thefirst three quarters registering a slower growth rate sequentially.However, on the assumption of higher domestic investment anddomestic consumption, growth rate is assumed to be higher at7.6% (7.3% by RBI) for FY 2012-13 and 8.6% for FY 2013-14 as

per CSO.

Money supply (M3) growth, which was 17% at the beginning ofthe financial year 2011-12, moderated during the course of the yearto about 13% by end-March 2012. It was lower than the RBI'sindicative trajectory of 15.5%, mirroring both tightness in primary

liquidity and lower credit demand during most part ofthe year. Aggregate Deposits of the SCBs grew by 17.4% during2011-12 (as on LRF March 2012). Non-food credit grew by 16.8% atthe end of March 2012, higher than the indicative projection of 16%.For the FY 2012-13, M3 growth projection has been retained at15% and Non-food credit growth at 17% and that for deposits at16% by RBI in annual monetary policy statement on April 17, 2012.As per the Financial Stability Report (FSR), December 2011, stresstests indicate that banking sector would be able to withstand therisks emanating out of the above scenario.


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Formulas Current Year

PreviousYear

Current Ratio

Current Assets

/Current Liabilities 0.77 0.79

Interpretation

Satisfactory day today liquidity solvency

position. There issufficient cash

available for thecompany to covermost of its currentliabilities, there is a

balanced investment

in the current assets.Only 0.23 proportionfunded by the longterm liabilities. this

ratio has shownimprovement.

Liquid RatioQuick Assets/ Current

Liabilities 0.77 0.79

Interpretation

Satisfactory day today liquidity solvencyposition. There is

sufficient cashavailable for the

company to covermost of its currentliabilities, there is a

balanced investmentin the current assets.Only 0.23 proportionfunded by the longterm liabilities. this

ratio has shownimprovement.

Solvency ratioTotal Liabilities/Total

Assets 1.00 1.00

Interpretation

The company hasemployed the funds

properly so as tocover its long term

and short term


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liabilities properly.itis a profitable

situation as theperformance hasbeen consistent.

Return on share holdersinvestment

NetProfit/Shareholders

Funds 0.12 0.14

Interpretation

the banksperformance in theshare market is very

good and year byyear the investors are

getting appreciablereturn on their

investment.

Ratio of reserves to equity capitalReserves/Equity

Share Capital 76.74 62.25

Interpretation

Ratio of reservesratio provide

information aboutthe company's ability

to absorb assetreductions arrising

from losses without jeopardizing the

interest of creditorswhich has been

increased from theprevious year.

Total debts to assets ratioTotal Debt/ Total

Assets 1.00 1.00

Interpretation

it providesinformation about

the company"s abilityto absorb assetsreduction arising

from losses without jeopardizing the

interest of creditors.

Net profit ratio Net Profit/NetSales*100 12.02 14.49


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Interpretation

The ratio indicatesthe firms capacity to

face adverseeconomic condition.

The performance ofprofit is showing therelation between the

investments or thecapital of the firm

which shows a goodperformance

although the ratiohas gone down.

Expenses Ratio

Expenses/Net

Sales*100 87.98 85.51

Interpretation

This ratio hasincreased which

shows that there isan increase in thevariable expenses

which has cut downon the profitability

while the salesremain the same.

Operating Expenses RatioOperating Expenses/

Net Sales 0.23 0.27

Interpretation

This ratio hasincreased which

shows that there isan increase in thevariable expenses

which has cut downon the profitability

while the salesremain the same.

Working capital turnover ratioSales/Net Working

Capital -0.43 -0.42


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Interpretation

the ratio hasdecreased

continously for twoyears which shows

that company is

concentrating moreon other functionsrather than

decreasing cost ofproduction

Fixed assets turnover ratioSales/ Net Fixed

Assets 12.82 9.85

Interpretation

the fixed asset

turnover ratio of PNBis higher the year

2012 for this year thecost of production is

higher than theremaining year

because the companyutilises higher

amount of fixedassets

Return on Capital Employed

Net Profit(PBIT) /Capital Employed x

100 103.57 99.38

Interpretation

the ratio hasincreased indicating

funds forappropriation

increase in the networth. High scope to

attract fresh fundsfrom the

shareholders. Highprice for each equity

shares on stockexchange or in

merger.

Operating profit RatioOperating Profit/Net

Sales*100 22.29 34.69


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Interpretation

the operating profitratio to sales ratio ofPNB shows that thebank posseses low

operating efficiency

in this year. Thatmeans the companyhas not concentrated

on minimising itscost.

Cash RatioCash/Current

Liabilities 0.07 0.09

Interpretation

this ratio indicatesthe total availablecash in hand to coverup any contingencies.

The ratio is goodenough analysing theeconomic condition

prevelent.

Interest Coverage Ratio PBIT/Intrest 1.77 2.02

Interpretation

since the ratio hasdecreased it indicatesweak capacity to payinterest as and whendue. Small balance

profit left for tax anddividends. Less scope

of providing more

scope to make highrate of interest.

Debt-Equity Ratio

Debt/(ShareCapital+Reserves &

Surplus) 14.99 16.02

Interpretation

the ratio shows highsafety margins forlenders. Scope for

providing more loansat low rate of interest


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and no trading onequity.

Debt to Asset RatioLong-term Debt/Total

Assets 0.91 0.91

Interpretation

the long term to debtratio is indicative of

coverage of the totaldebt that can be

covered the Assestsof the firm. The ratiohas been constant forthe years which is a

good indicator.

Return on Equity PAT/Net Worth 0.18 0.21

Interpretation

small amount forappropriations thereis low increase in thenet worth resultinginto less scope toattract fresh fundsfrom equityshareholders lowprice for each equityshares and stockexchange or in amerger.


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CONCLUSION

From the Analysis of the balance sheet of PNB Bank, it was

very obvious that the performance of the bank during the

financial period 2011-12 was good looking into the economics

condition of the Economy. It is very obvious that with the

downsizing growth ra te and the regulations of the RBI. The

bank has performed well and has managed to put on a profit of

PARTICULARS FINANCIAL

YEAR(2010-

2011)

FINANCIAL

YAER(2011-

2012)

GROWTH

RATE (%)

Operating Profit 9056 10614 17.2

Provision 4622 5730 24

Net Profit 4433 4884 10.2


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BIBLIOGR PHY

To complete the following project we have used the following

resources.

1) Annual Report PNB Bank

2) Paresh Shah

3) Mba

4) Pearsons

PNB Analysis 2012

Documents

Transcript of PNB Analysis 2012